This study measures risk and loss aversion using Prospect Theory and examines the impact of emotions on these parameters. Students’ emotions were manipulated using information on rising deaths due to drug violence in Mexico and youth unemployment and Tanaka et al. (2010) methodology was...

This paper tests whether utility is the same for risk and for uncertainty. This test is critical for models that capture ambiguity aversion through a difference in event weighting between risk and uncertainty, like the multiple priors models and prospect theory. We present a new method to...

Markowitz (Journal of Political Economy 60:151–158, <CitationRef CitationID="CR27">1952</CitationRef>) identified a fourfold pattern of risk preferences in outcome magnitude: When outcomes are large, people are risk averse in gains and risk seeking in losses, but risk preferences reverse when the outcomes are small, with people...</citationref>

Most economic models are prescriptive and based on expected utility theory. Decisions taken on the basis of these models ought to be completely rational and consistent with axioms of the expected utility theory. Prospect theory (PT) is an alternative theory of choice under risk and increasingly...

Our article firstly examines to what extent empirical research confirms the model of decision making based on a stable utility function. To this end, we have summarised the fundamental theoretical correlations relating to risk appetite, then went on to present the main results of behavioural...

Based on measurements with 332 owner-managers, the global shape of the utility function (i.e., S-shaped versus concave or convex over the total range of outcomes) appears to discriminate organizational behavior. Whereas the degree of risk aversion, based on the local shape of the utility...